Boom Doom Economy: Global Services Growth Rises Slightly in May (Chart) "Rate of expansion was still only modest"

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Global Services PMI by JPMorgan

Official Statement by JPMorgan The JPMorgan Global Services Business Activity Index rose slightly to 52.5 in May, up from the 21-month low of 51.0 in April. The rate of expansion was still only modest and below the average for the ongoing recovery that began in August 2009. The acceleration during May was mainly the result of stronger growth in China and a marked easing in the rate of contraction in Japan following the earthquake-affected readings of March and April. Japan saw a further marked decrease in business activity nonetheless and was the only nation covered by the survey to report a decline.

Commenting on the Survey David Hensley, Director of Global Economics Coordination at JPMorgan, said: "Growth of the global service sector accelerated in May, mainly reflecting a modest bounce-back from the sharp slowdown seen in the previous month. The underlying trend remains one of slower growth than at the start of the year. Job creation was sustained for the eleventh month running, but cost inflation failed to show as substantial an easing as that seen at manufacturers."

Trend The short-term trend has reversed to upwards, after the prior 2 months of sharp declines. The intermediate-term trend (6 months) continues downwards. The long-term trend (12 months) continues downwards.

Cycle History The JPMorgan Global Services PMI reached a Post-Great Recession cyclical peak of 59.2 in February 2011. A intermediate term cyclical low of 50.3 was set in November 2009. The PMI is a percentage - not a total. More about the PMI below the chart.

Global Services PMI (Chart) Below is a chart of the JPMorgan Global Services PMI from August 2009 through the latest month reported. The PMI has been greater than 50, indicating global services are expanding, since August 2009, for 22 consecutive months. The PMI peaked in April 2010. Any reading above 50 indicates global services is expanding.

Commentary The Global services sector expanded for the 22nd month and the rate of growth increased slightly. The Global Services PMI has dropped from the Post-Great Recession high and a 58-month high (highest since April 2006) set in February 2011. Global manufacturing sector growth slowed in May 2011 and is reviewed here [Global Manufacturing Growth at 8-Month Low (Chart) *23rd month of expansion*].

About The PMI The Global Report on Services is based on the results of surveys covering around 3,500 executives carried out in the USA by ISM, and in Japan, China, the UK, Germany, France, Spain, Italy, Brazil, India, Russia, Ireland and Hong Kong by Markit, in Australia by AiG, New Zealand by Business NZ and Mexico by HSBC. These countries together account for an estimated 80% of global service sector output. For the US, data are taken from the ISM non-manufacturing survey which, in addition to the service sector included in the other countries, also includes agriculture, construction, mining, public administration, retail, utilities and wholesale sectors. The Hong Kong PMI also covers construction, manufacturing and retail. Questions are asked about real events and are not opinion based. Data are presented in the form of diffusion indices, where an index reading above 50.0 indicates an increase in the variable since the previous month and below 50.0 a decrease.

Data sources: Country % share of global GDP

United States 28.6

Japan 12.3

China 7.4

Germany 5.0

United Kingdom 4.2

France 3.7

Italy 2.8

Brazil 2.2

India 2.2

Spain 1.8

Australia 1.4

Russia 1.0

Hong Kong 0.6

Ireland 0.3

New Zealand 0.2

J.P. Morgan Chase & Co. is a leading global financial services firm with assets of $803 billion and operations in more than 50 countries. The firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing, investment management, private banking and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase is headquartered in New York and serves more than 30 million consumer customers nationwide, and many of the world’s most prominent corporate, institutional and government clients. Information about JPMorgan Chase is available on the internet at http://www.jpmorganchase.com/.

Markit Economics is a specialist compiler of business surveys and economic indices, including the Purchasing Managers’ Index™ (PMI™) series, which is now available for 26 countries and key regions including the Eurozone and BRIC. The PMIs have become the most closely-watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to www.markit.com/economics.

Founded in 1915, the Institute for Supply Management™ (ISM) is the largest supply management organization in the world as well as one of the most respected. ISM's mission is to lead the supply management profession through its standards of excellence, research, promotional activities and education. ISM's membership base includes approximately 40,000 supply management professionals with a network of domestic and international affiliated associations. ISM is a not-for-profit institute that provides opportunities for the promotion of the profession and the expansion of professional skills and knowledge.

The International Federation of Purchasing and Supply Management (IFPSM) is the union of 42 national purchasing associations worldwide. Within this circle, about 200,000 purchasing professionals can be reached. IFPSM is a non-political, independent and non-profit oriented international organisation, registered in Aarau, Switzerland. IFPSM facilitates the development and distribution of knowledge to elevate and advance the procurement profession, thus favourably impacting the standard of living of citizens worldwide through improved business practices.

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